New Zealand’s currency overvaluation cannot be simply put down to economic weakness elsewhere say the New Zealand Manufacturers and Exporters Association (NZMEA). It is the monetary policy contrast between the RBNZ’s inaction and the interventionist policies overseas that accounts for a persistently overvalued currency.
NZMEA Chief Executive John Walley says, “The ‘there is nothing we can do’ mind-set needs to change. The economic weakness of others we can’t control but our own policy response we can. Changes need to be made to support an export lead recovery for New Zealand.”
“Over the past year we have seen other countries ‘independent’ central banks taking action to lower their exchange rates, whether through quantitative easing in the United States and the United Kingdom, capital controls in Canada and Brazil, or direct currency management in Switzerland and Singapore.”
“There has been no such action in New Zealand and our export sector, particularly the high added value sector, continues to suffer as a result.”
“It is complacent to suggest there is nothing we can do when many countries have successfully supported their export sectors,” says Mr Walley.
“We need sensible and pragmatic policy from the Government and the Reserve Bank to provide similar support our export sector. We are an export exposed country – we cannot simply sit back and pretend we cannot have some control of our own destiny.”